Update on the latest Swiss governance developments: Relevance and need for action
Recently, important political decisions were taken regarding the future frameworks of Swiss companies and their shareholders:
1. After more than a decade of deliberations, the Swiss parliament adopted a broad revision of the Swiss stock corporation law. Among others, the revision significantly strengthens shareholders’ rights. Companies should make use of the transition time of two years until the revision becomes effective to strengthen their corporate governance and corporate social responsibility frameworks, improve disclosure quality, and intensify stakeholder engagements.
2. The Swiss parliament adopted an indirect counter-proposal against the stringent “responsible business initiative” (RBI). A national referendum will be held later in 2020 on the two proposals. The RBI would hold Swiss companies liable internationally for insufficient diligence in environmental and social matters not only within their own organization but importantly also for the actions of their suppliers. Moreover, the burden of proof would be reversed and rest with the companies. Going into this referendum, it will be crucial that the public understands the effort Swiss companies are undertaking, the benefits of the disclosure-based counter-proposal, and the drawbacks of the far-reaching RBI for Switzerland as a business location.
3. The federal council recently adopted a report and guidelines regarding “Sustainable Finance”. The government intends to provide a supportive environment in Switzerland to develop a “leading sustainable financial center”. It is now the industry’s responsibility to build on this framework and develop the tools needed to effectively contribute to sustainability. This should include strategies for active ownership and socially responsible investment processes, including stewardship, instead of the still widely-spread ESG labeling and exclusion approaches.